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Santa Monica Adopts New Minimum Wage and

Sick Leave Law
On February 25, 2016, the City of Santa
Monica’s
Ordinance
Number
2509
(“Ordinance”) became effective, though the
majority of its provisions are set to go into
effect on July 1, 2016. The Ordinance
provides for sweeping changes to Santa
Monica’s minimum wage and sick leave
requirements. While similar legislation has
been adopted by several Northern California
municipalities, Santa Monica is the first
Southern California municipality to adopt its
own sick leave legislation in excess of
California’s paid sick leave (California
Healthy Workplace, Health Families Act of
2014 became effective in July 2015). In
addition, the Ordinance will raise the
minimum wage to $15.00 for many Santa
Monica employers by 2020. This Ordinance
increases minimum wage rates at a faster rate
than the recently approved changes to the
statewide minimum wage, which raises the
California minimum wage to $15.00 by 2022.
Santa Monica’s City Council authorized a
working group to review and recommend
amendments in response to specific concerns
related to the Ordinance. Recommendations
for proposed amendments were issued by the
group at the end of March and will be
considered by the City Council on April 26,
2016. We will let you know if the City
Council adopts any changes to the terms of the
Ordinance.
In the meantime, for more
information about the working group’s Item
Report,
visit
here:
http://www.smgov.net/departments/HED/Econ
omic_Development/Minimum_Wage_Proposa
l.aspx

New Minimum Wage Rates for Private
Sector and Hotel Employers
The Ordinance defines “employee” as any
person who performs at least two hours of
work within the boundaries of Santa Monica
in “a particular week” and qualifies as an
employee under the Labor Code and wage
orders.
Employers with 26 or more employees shall
pay no less than the following hourly wage
rates:




$10.50 per hour by July 1, 2016;
$12.00 per hour by July 1, 2017;
$13.25 per hour by July 1, 2018;
$14.25 per hour by July 1, 2019; and
$15.00 per hour by July 1, 2020.

These changes mirror the City of Los
Angeles’ Minimum Wage Ordinance. More
information
can
be
found
at
https://bca.lacity.org/site/pdf/lwo/Los%20Ang
eles%20Minimum%20FAQ.pdf
Employers with 25 or fewer employees have
an additional year to satisfy the minimum
wage requirements.
Specifically, smaller
employers must pay Santa Monica employees
the hourly wage of $10.50 by July 1, 2017,
$12.00 by July 1, 2018, $13.25 by July 1,
2019, $14.25 by July 1, 2020, and $15.00 by
July 1, 2021.
The Ordinance singles out “hotel employees”
for special wage treatment.
A “hotel
employee” is defined as any individual whose
primary place of employment is a hotel or has
contracted with a hotel employer, but does not
include
managerial,
supervisory
or
confidential hotel employees. Under the
Ordinance, hotel employees shall be paid no

Santa Monica Adopts New Minimum Wage and
Sick Leave Law
less than $13.25 by July 1, 2016 and $15.37
by July 1, 2017.
Employees who qualify as learners in
accordance with California law and wage
orders, are to earn not less than 85% of the
minimum wage rounded to the nearest nickel
during their first 480 hours or six months of
employment, whichever is sooner; thereafter,
learners are to be paid the Ordinance’s
applicable minimum wage.
The Ordinance further provides that on July 1,
2022 for private sector employees and July 1,
2018 for hotel workers, and annually
thereafter, the minimum wage will increase
based on the Consumer Price Index for Urban
Wage Earners and Clerical Workers for the
Los Angeles metropolitan area. Santa Monica
will announce adjusted rates each January 1st,
with increases taking effect on July 1st of each
year.
The Ordinance also includes posting
requirements informing employees of the
current minimum wage rate and rights under
the Ordinance, along with notices in any other
language spoken by at least five percent of the
workforce.
Service Charges and Surcharges
The Ordinance requires employers in Santa
Monica to distribute all “Service Charges” in
their entirety to employees who perform
services for customers from whom the service
charges are collected, with the exception of
supervisory and managerial employees.
Service Charges are to be paid “equitably” and
according to the services that are or appear to
be related to the description of the amounts
given to the employer by the customers.
Service Charges are defined as charges

customers might reasonably believe are for
services or are otherwise paid or payable
directly to employees, including charges
designated on receipts, invoices, or billing
statements under the term “service charge,”
“table charge,” “porterage charge,” “automatic
gratuity charge,” or similar language. Specific
rules for banquet and catered meetings also
apply. Employers with lawful tip-pooling
practices in place prior to the Ordinance may
continue such practices.
The Ordinance explicitly allows for employers
to impose “Surcharges” in addition to or
instead of a Service Charge so long as the
employer provides a title or description of the
Surcharge that customers might easily and
reasonably deduce what the Surcharge is for,
and indicate that such amounts do not
represent a Service Charge, gratuity or tip for
employees. The Ordinance provides that
Surcharges are those charges designated on
receipts such as “health surcharge,” “health
benefits,” “benefits,” “facility rental,” or
similar language.
Paid Sick Leave and Deviations from
California’s Paid Sick Leave Law
Consistent with California state law, Santa
Monica employees must accrue at least one
hour of paid sick leave for every 30 hours
worked, including overtime. Sick time is only
to accrue in hour increments.
The
Ordinance’s cap differs from the state law cap
as follows:

Employers with 26 or more employees
must permit employees to accrue a
maximum of 72 hours of sick leave
that can be carried over from year to
year; and

Santa Monica Adopts New Minimum Wage and
Sick Leave Law

Employers with 25 or fewer
employees must permit employees to
accrue a maximum of 40 hours of sick
leave that can be carried over from
year to year.

Note that state law permits employers to cap
usage of paid sick leave at 24 hours per year,
while the Ordinance does not provide for any
similar cap on usage. Also, the Ordinance
does not explicitly allow for front-loading of
paid sick leave like state law does, but frontloading is likely permissible if it provides for
more generous sick leave than the hourly
accrual method.
Consistent with state law, the Ordinance also
provides that an employee is eligible to use
accrued paid sick leave after the first 90 days
of employment or consistent with the
employer’s policies, whichever is sooner.
Employers may require an employee to give
reasonable notification of an absence for
which paid sick leave is or will be used
consistent with state law. Paid sick leave
provided for under the Ordinance may be used
for reasons consistent with California’s paid
sick leave law (i.e., diagnosis, care or
treatment of an existing health condition of, or
preventative care for, an employee or the
employee’s family member).
Lastly,
consistent with state law, the Ordinance does
not provide for payment of sick time at
termination unless the benefit is part of a paid
time off plan.
Exemptions and Employee Protections
The minimum wage and sick leave provisions
of the Ordinance may be waived in a bona fide
collective bargaining agreement, but only if

the waiver is explicitly set forth in the
agreement in clear and unambiguous terms.
The Ordinance specifically exempts from
coverage of government agencies, including
federal and state agencies, cities, counties,
school districts and other public entities. In
addition, non-profit corporations with 26 or
more employees may qualify for a deferral of
the minimum wage rate (to mirror the
schedule for minim wage rates for employers
with 25 or fewer employees) if the non-profit
satisfies one of the defined exceptions.
The Ordinance also has significant antidiscrimination, harassment and retaliation
provisions. Notably, taking adverse action
against a person within 180 days of an
individual’s exercising rights under the
Ordinance raises a rebuttable presumption that
the adverse action was taken in retaliation for
the exercise of such rights.
Compliance Assistance
For more information
assistance, please contact:
Jeff Dinkin
(805) 730-6820
(949) 725-4098
(424) 214-7016
jdinkin@sycr.com

or

compliance

Nicole Zajack
(424) 214-7017
nzajack@sycr.com

In addition, notice will soon be going out
about Stradling’s presentation in May on this
and other important new employment law
developments.
Stradling’s Labor and
Employment team will discuss the new
regulations in depth and answer your
questions during this presentation. In the
meantime, please contact your Stradling
attorney for more information.